FBT consolidates its position as nuisance tax for Australian business
Sydney, Australia – CCH, a Wolters Kluwer business and global leader in tax, accounting and audit information, software and services for professionals today revealed the findings, of its 2013 Fringe Benefits Taxation Survey. The CCH FBT Survey confirmed a renewed interest from financial team respondents now grappling with their impression of FBT as highly time-consuming, complex and an issue from a corporate productivity perspective.
The CCH FBT Survey findings also highlighted an element of conflict in responses, indicative of an overall larger and greater concern. Around 80% of respondents confirmed a high level of confidence in meeting regulatory reporting requirements. Yet, those same respondents indicated that they were finding the collection, identification and calculation of data a complex challenge. For these finance teams the contradiction was spelt out in concerns raised regarding internal processes (87%), time taken for reporting (60%) and internal knowledge levels (39%).
The CCH FBT Survey is based on the responses of more than 700 corporate tax, accounting and finance professionals registering for the annual CCH FBT Roadshow. The CCH FBT Roadshow is a platform for organisations to remain up to date on changes in FBT legislation and the practical implications of those changes. The 2013 CCH FBT Roadshow explored issues including the changes in treatment to salary packaging, Living Away From Home Allowance (LAFHA), motor vehicle transitional arrangements and airline travel benefits, together with expected legislation and penalties for late or incorrect lodgement of FBT returns.
Tony Katsigarakis, Regional Director Client Development for CCH’s Corporate Reporting Solutions, said there is a discernible spike in interest in FBT administration and compliance driven by higher levels of uncertainty and regulatory change. “For particular organisations, such as those in the resources sector, the reforms to the LAFHA tax concession are a major concern with complex rules that vary depending on the status of the employee through the year.
“In fact almost 60 per cent of our respondents across all industries confirmed that both LAFHA and transitional arrangements for motor vehicles were key to their renewed focus on FBT administration and this drove a record attendance at the CCH FBT Roadshow. The proposed reforms will require further updates and it's imperative that tax professionals understand transitional measures and compliance requirements,” he said.
“Overall it was those respondents with great confidence in their internal operations, as well as those implementing specialist software or using external advisors in their FBT return process that reported the highest levels of satisfaction,” he observed.
All CCH FBT Survey participants were also polled on the time it takes to complete FBT reporting. Over 40% of organisations admitted to 100+ hours for reporting, with some of the larger organisations reporting in excess of 1,000 hours being invested in annual lodgements of FBT returns. Interestingly, cost of compliance tables published by the Australian Taxation Office on “average hours to complete the FBT form” for 2009-2010 show an average of less than 15 hours across all market segments with the maximum average of only 87.2 hours for government sector employers with more than 1,000 employees.
Technology was also covered in the CCH FBT Survey, highlighting an overall positive implementation of technology when producing FBT reports. Respondents rely on specialist software programs, at least in part, to assist the completion of returns. The use of this software ranked as the lowest operational concern for finance and management teams (17%). Notwithstanding, in relation to the effectiveness of third party FBT software solutions, over 80 per cent continued to report difficulty in data collection.
Wrapping up the CCH FBT Survey summary of findings, Katsigarakis provided timely advice for finance teams grappling with the reporting processes for FBT:
• Increase the knowledge and skills base of staff involved in FBT reporting, from educating staff on capturing activity when submitting expense claims to FBT data entry staff, and all the way through to those responsible for preparing and reviewing the returns.
• Develop internal policies and train staff and management on navigating the highly personal data disclosures required for LAFHA as these are unprecedented and are now the responsibility of each employer. Privacy considerations need to be handled with care.
• Implement specialist software platforms and programs supplemented by robust internal processes to streamline the production of FBT reports in line with transitional measures and compliance needs for the annual return process. Organisations ignoring this step are contributing to greater inefficiencies.
• Start early! Implement strategies to process data throughout the year to diminish the burden at the end of the FBT year.
For more information, please contact:
Cathryn van der Walt
12 Worlds on behalf of CCH T: +61 (0) 402 327 633 | [email protected]
Regional Director Client Development, CCH Corporate Reporting Solutions, Wolters Kluwer Asia Pacific
T: +61 2 9857 1350 | [email protected]